How to Write the Target Market of your Business Plan

The purpose of the target market section of your business plan is to prove that the market is large enough in your area to support the survival and growth of your business.

however, it is noticed that the success of many new ventures is often determined by how well they have prepared this section of the business plan.

The section itself should be broken down into subsections:

Industry analysis,

Market analysis, and

Competitor analysis.

Begin by providing a brief description of the market you will be competing in, define your market, how large it is, and how much of the market share you expect to capture.

It is important to reference credible sources and includes the name of your source(s) of information along with a date. Indicate how you will market the products/services and which channels will be used to deliver your products/services to your target market(s) (i.e. website, direct sales force, Value Added Re-sellers, channel partners, etc…).

Be sure to answer the following questions that are usually asked by potential investors:

What are the key drivers, trends, and influences in the market?

To whom do you market your products and services?

How will you educate your customers to buy from you?

Who is your target market?

What is your total industry-wide sales volume? In dollars? In units?

What are the trends in sales volumes within your industry?

Who are the major players and your key competitors? What are they like?

What does it take to compete? What are the barriers to entry?

What technological trends affect your industry?

What are the main modes of marketing?

How does government regulation affect the industry?

In what ways are changing consumer tastes affecting your industry?

Identify recent demographic trends affecting the industry.

How sensitive are the industry to seasons and economic cycles?

Furthermore, the focus of your target market is who are you selling to? Depending on the type of business you are starting and the type of plan you are writing, you may not need to go into too much detail here.

But, no matter what, you must be aware who your customer is and have an estimated value of how many there are. If your customers are few, it may just be a bad signal for you.

Therefore, it is pertinent to do your market research. Every business can benefit from doing market research to make sure it is where it wants to be. Use the business planning process as your opportunity to uncover data and question your marketing efforts.

Be rest assured it will benefit your business in the future and if the time is well spent. first, you will find your market segments and then decide how big each segment is. A market segment is a group of people or businesses that you planned to sell to.

Whatever the facts are, you’ll need to support them with an analysis of the state of your industry and any trends taking place.

You need to support your opinions with market research that identifies specific competitors and outlines their weaknesses and strengths and any barriers to entry into the market.

You need to describe why your industry is valuable and how it will continue to be important. Finally, and perhaps most important, you’ll have to convincingly describe what makes you better and destined to succeed.

When preparing the state of the industry section, instead of looking at your business as a self-contained system.

You’ll describe the industry in which you work and point to your position in that universe. You then zero in on your country, your state, and your local community, deepening on how far your business stretches.

The following are the subsections to consider while writing this section of your business plan.

Why do they buy?

Consumer Markets: How does your product or service help the consumer?

Business Markets: How does your product enhance the performance of the customers’ business?

How much do they buy?

Consumer Markets: Determine how much is spent on your product by your customers.

Business Markets: Estimate the commercial expenditure by the industries in your target area

Note: If you are using indirect distribution, it may be necessary to describe both your customers as a target market and the end-user as a target market. It is a good idea to state your sources. This gives the reader more confidence in the information and in the case, you are making for your business.

Competitive Analysis

Provide the results of any customer survey work you have done and the sources of information.

List the direct competitors in your local market. These are firms who offer exactly what you offer. List the current number and the number in existence for the past three-year period.

List the indirect competitors in your local market. These are firms who offer substitute products.

Analyse any competitors who have gone out of business in the past and if possible describe why their business failed.

Explain how your firm will compete with these competitors to prove how you can survive in their markets.

Examine risks that could occur when you enter the market. For example, what if your key competitor cuts their price when you open your business?

Position your product. Show how your products/services or company is different from your competition.

Now Over to You

Do you think this information was any useful or do you have any contribution to make about this topic? Kindly leave your thoughts at the comment box below.

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About Ini Patrick

Hello, I'm Ini Patrick, a Serial Entrepreneur, Business Analyst, and Web Business Strategist. Am committed to helping entrepreneurs grow their business by sharing hybrid information and ideas that teaches strategies and systems to start and grow any business.

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Hello! My name is Ini Patrick, I’m committed to helping entrepreneurs do better. I share hybrid information and ideas that teaches strategies and systems to help you start and grow any business. Here’s how you can learn moreabout this blog, contact me or submit an article. Cheers!

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Ini Patrick Notes was conceived with the intention of sharing hybrid informative and educative information on business and entrepreneurship that will propel and help start-ups and SMEs to think beyond the possible to succeed in their business adventures. The overarching purpose of this blog is to share valuable information on business ideas, advice, tips, opportunities and resources that will motivate, and inspires young entrepreneurs and keep them satisfied in their business endeavors.